Punj Lloyd eying ABB Lummus; L&T may make enter race
26 March 2007
Engineering and construction major Punj Lloyd is eyeing
the US subsidiary of ABB Ltd, ABB Lummus Global - a $1-billion
engineering and consulting company.
Media reports, meanwhile, said Larsen and Toubro, its larger rival may also make a bid to acquire the ABB subsidiary.
ABB Ltd, which had plans to sell off its US subsidiary ABB Lummus Global, meanwhile, said it''s not desperate to a sell the subsidiary, although it did not rule out such a possibility in the medium term.
ABB Lummus has bagged big-ticket orders from global oil majors and has a current turnover of $1billion. Analysts believe that the subsidiary, which is not core to the ABB group''s business, is on the block. The company, which was facing charges under asbestos liabilities in the recent past, has also come out unscathed.
New-Delhi based Punj Lloyd, the country''s second-largest engineering and Construction Company after Mumbai-based Larsen & Toubro, seems to be more interested in acquiring the ABB subsidiary than L&T.
Punj Lloyd, which listed early last year, has an order backlog of Rs16, 496.6 crore. The company recently won a Rs1,300 crore order from ONGC for building an offshore platform.
A leader in the country in pipelines construction, this was also its first offshore platform project for Punj Lloyd. It also makes sense for Punj Lloyd to acquire ABB Lummus as it can derive benefits of synergy.
Punj Lloyd may have to tap the market with an equity issue to augment its working capital requirement to service its burgeoning order book.
Analysts say that L&T with its market clout could provide tough competition to Punj Lloyd. But, as things are, L&T has enough in hand in terms of project execution and pending orders and may not want to risk making a big-ticket acquisition at this juncture.
Punj Lloyd subsidiary Sembawang Engineers and Constructors has bagged a Rs542 crore order from Bahrain''s state-run Riffa Golf and Residential Development company (RGRDC).
Sembawang has entered into a joint venture agreement with G P Zachariades to execute the RGRDC project, involving construction of 325 residential villas, Punj Lloyd said in a statement.
Sembawang had earlier completed the Jumeirah Islands development project for Nakheel Group in Dubai.